Bold headlines in Indian newspapers highlighting the concept of "fit and proper" (to serve as Board Member of private banks) of the Reserve Bank of India, the Central Bank or Fed of India, carried statements by Yes Bank top management and an ex-Board chair that gave off the subliminal impression that the "traumatized widow" of the late co-founder of Yes Bank, Mr. Ashok Kapur, was attempting to foist an unqualified individual on the Bank's Board. However, there is a markedly different reality. Ms. Shagun Kapur Gogia, whose bid to serve on the Yes Bank Board (the lawsuit by her mother Ms. Madhu Kapur in support of that bid and request to block the Annual General Meeting triggered those headlines) is indeed eminently qualified to serve on the Yes Bank Board.
Media reporting verbatim the statements from the Bank ought to have simultaneously pointed out that Ms. Gogia is a double major in Biology and Economics from Boston's Tufts University, well known for its rigor particularly in the biological sciences, and Ms. Gogia also holds an M.B.A. from the Indian School of Business in Hyderabad, and further, she has co-founded, funded and/or leads several ventures with a focus on global logistics and the cold chain that are vitally needed but often neglected parts of core infrastructure. Microbiological spoilage of grains, fruits and vegetables is a major cause of malnutrition in India. Alarming post-harvest losses of over 40% have been lowered now because of significant leadership from the Government (including providing for accelerated depreciation and major subsidies) and the prescient efforts (see here and here and here and here and here) of entrepreneurs and financiers like Ms. Gogia and her partners.
The RBI Criteria
In its statements, Yes Bank stated that it is not a family feud, but that they are guided by the "fit and proper" guidelines of the Reserve Bank of India (RBI). Presumably, they assumed that no one would find the specific criteria; however, the RBI has put on its website, guidelines for 'fit and proper' norms for nomination of directors (see here and here).
RBI guidelines state: "the Board of Directors of the banks while nominating/ co-opting directors should be guided by certain broad 'fit and proper' norms for directors, viz. formal qualification, experience, track record, integrity etc. For assessing integrity and suitability features like criminal records, financial position, civil actions initiated to pursue personal debts, refusal of admission to or expulsion from professional bodies, sanctions applied by regulators or similar bodies, previous questionable business practices etc should be considered. The Board of Directors may, therefore, evolve appropriate systems for ensuring 'fit and proper' norms for directors, which may include calling for information by way of self-declaration, verification reports from market, etc."
The RBI further states that "the following criteria, which is in vogue in respect of nomination to the boards of public sector banks, may also be followed for nominating independent/ non-executive directors on private sector banks:
The candidate should normally be a graduate (which can be relaxed while selecting directors for the categories of farmers, depositors, artisans, etc.)
He / she should be between 35 and 65 years of age.
He / she should not be a Member of Parliament / Member of Legislative Assembly/ Member of Legislative Council."
Memory, Mis-Communication, and Qualifications
It is obvious from the above that Ms. Gogia easily meets RBI criteria for Board membership. Further, one of India's foremost banking executives, Mr. Deepak Parekh, Chairman of the HDFC Bank, publicly opined that Ms. Gogia is qualified to serve as a Yes Bank Board Member.
Both feuding families of co-founders Mr. Kapoor and the late Mr. Kapur, husbands of two sisters, own roughly 12-14 percent of the shares of Yes Bank. It appears to be a case of mis-communication and the usual hyper-competitiveness within extended families in Asia. For all their vast wealth (each family has about $400 million in Yes Bank stock alone), both families have children who strive a great deal, and that is not so common either in India or elsewhere.
Ms. Gogia perceived the opposition to her Board membership to be part of a campaign to erase the memory of her father, the late co-founder Mr. Ashok Kapur, who was tragically killed in the dastardly terrorist attack on Mumbai in 2008.
Looking through the Yes Bank website, there is in fact little immediate trace of the memory of former Board Chair and co-founder Mr. Ashok Kapur. In contrast, even 41 years since my late father V.J. Chacko's death and 54 years since his graduation with a Ph.D., the University of California at Berkeley maintains a website with the link to his name and therefore his memory. Only those who have been through the pain that comes from the sudden death of a loved one would understand why honoring his/her memory is part of the process of coming to terms, and what possibly prevents Yes Bank from having an "In Memoriam" link to a page on co-founder Mr. Ashok Kapur crafted by his children?
The unpleasant spat between the two founding families has highlighted the issue of stock ownership and Board membership. There are indeed numerous publicly-traded companies with a roster of founders' children on the Board. Therefore, having a qualified daughter of a co-founder need not have raised hackles. It also calls into question the role of others on the Board who could have prevented such public acrimony by quietly counseling co-founder and current CEO Mr. Rana Kapoor about the futility of efforts to deny Ms. Gogia a Board seat in an era where giving senior managerial and Board opportunities to qualified women is the norm. Indeed, egged on by my good friend Dr. Kiyoshi Kurokawa (see here and here), who has been science advisor to Japanese Prime Minister Shinzo Abe, the PM has become a staunch supporter and told our Arianna Huffington about his efforts in this respect.
As directed by the Bombay High Court, the Yes Bank Board will take up the potential nomination of Ms. Shagun Kapur Gogia at its meeting to be held on or before June 27, 2013. Surely, common sense should prevail.